Exhibit 1

Baker Adhesives
Computation for Changes in Revenue
Units Ordered (in gallon)
Selling price (in BRL)
Anticipated Total Revenue (in BRL)
Mulitply: Original Exchange Rate
Anticipated Total Revenue (in USD)

1,210.00
86.23
104,338.30
0.4636
$

Anticipated Total Revenue (in BRL)

Multiply: Current Exchange Rate
Realized Total Revenue (in USD)

104,338.30
0.4368
$

Realized Total Revenue (in USD)

Anticipated Total Revenue (in USD)
Effect in Revenue (in USD)

48,371.24

45,574.97
45,574.97
48,371.24

(2,796.27)

Exhibit 2
Baker Adhesives
Computation for Changes in Profit
Anticipated Total Revenue (in USD)
Estimated cost of production

48,371.24
44,500.00

Anticipated Profit

3,871.24

Realized Total Revenue (in USD)

Estimated cost of production
Realized Profit

45,574.97
44,500.00
$

Realized Profit
Anticipated Profit
Effect on Profit

1,074.97
1,074.9700
3,871.24

(2,796.27)

-0.057808 percentage change in revenue

-0.057808 change in exchang rate

-0.722319 percentage change in profit

Computation for future Cash Inflow in Novo's new order

Units (in gallons)
Selling Price (in BRL)

1,815.00
86.23

Future Cash Inflow (in BRL)

156,507.45

Given Rates
Spot rate US$/BRL
Forward rate
Expected spot rate
U.S. line of credit
Three month effective rate

43.71%
42.27%
42.34%
8.52%
2.15%

Real rate to borrow

26.50%

Three month effective rate

6.50%

NPV Computation for Future Cash Inflow

(Unhedged)
Future Cash Inflow (inBRL)
Expected Dollar Spot Rate
Dollar Conversion

$
$

Discount Rate
NPV

156,507.45
42.34%
66,265.25
1.021452

64,873.59

NPV Computation for Future Cash Inflow

(Forward Market)
Future Cash Inflow (inBRL)
Expected Dollar Forward Rate
Dollar Conversion

$
$

Discount Rate
NPV

156,507.45
42.27%
66,155.70
1.021452

64,766.33

NPV Computation for Future Cash Inflow

(Money Market)
Future Cash Inflow (inBRL)
Three Month Effective Rate
Amount to be Borrowed (in BRL)

$
$

Spot Rate
NPV

156,507.45
1.065
146,955.35
0.4368

64,190.10

Baker Adhesives
Computation of Possible Profit from New Order
Revenue (in USD
Less: Costs
Labor
Materials

$ 66,155.70
9,000.00
48,750.00

Additional Materials to be bought

Manufacturing Overhead
Administrative Overhead
Profit (loss)

1,218.75
6,000.00
3,000.00
$ (1,813.05)

Baker Adhesives
Computation of Possible Profit from New Order
Revenue (in USD
Less: Costs
Labor
Materials

$ 66,155.70
9,000.00
48,750.00

Additional Materials to be bought

Manufacturing Overhead
Administrative Overhead
Profit (loss)

1,218.75
$

7,186.95

NPV of Unhedged V.S Money-Market Hedge

NPV Unhedge
NPV Money-Market Hedge
Difference

$
$
$

64,873.59
64,190.10
683.49

NPV of Unhedged V.S Forward Hedge

NPV Unhedge
NPV Forward Hedge
Difference

$
$
$

64,873.59
64,766.33
107.25